2.5.0 Introduction

Our analysis shows that by 2005, there was strong convergence around the 5% level for initial ownership disclosure.1 In recent years, however, some countries have further lowered the disclosure threshold. A survey conducted among EU Member States shows that by 2008, six countries had their thresholds set at 3% or even 2%, while another recent survey shows that outside the EU, too, there are countries whose threshold is now below 5%.2 Driven by concerns over hedge fund activism, others may soon follow suit.3 Indeed, the European Securities Markets Expert Group has stated that "[i]mportant financial markets are converging to 3%", and that "it is important that the others (...) follow as soon as possible".4

Yet, while we may witness convergence toward the 3% level in the future, it appears unlikely that there will be many countries setting their disclosure threshold at an even lower level. A threshold of, say, 1%, may tip the scale and cause the benefits of disclosure to be exceeded by the costs (such as compliance costs and reduced incentives to search for information on the fimdamental value of firms).5 Indeed, more shareholder protection need not necessarily be better.6 Ideally, the evolution of ownership disclosure mies ends not at a point where a "maximum" but an "optimum" has been found.7

It can be expected, though, that beyond this point, the evolution of ownership disclosure mies will continue in other dimensions. As will be explained below, besides the height of the disclosure threshold, there are two other aspects of ownership disclosure mies that particularly affect their stringency: the definition of the stake that triggers disclosure and the scope of the actual disclosure obligation.8